united kingdom: January 14, 2010

I see no Ships.  As the immortal line of the great naval hero Horatio Nelson fades into the distance, British waters were again recently under siege as 54 oil tankers loitered off the coast lying in wait for fuel oil price hikes before delivery.

According to industry experts, tanker captains have been told to wait for crude oil prices to rise prior to offloading their cargo.  The biggest fleet of 30 tankers anchored off the coast of Nelson’s beloved East Anglia, waiting there for the price of crude to increase enabling more profit to be taken.  Naturally, had all the oil been delivered at the same time, crude oil and petrol prices would have dropped.  It is no secret that falling demand coupled with over-production have resulted in the increased use of “floating storage” not only for crude oil, but LNG as well.  Charter rates have “sunk” to seven year lows over the past four months reflecting a slowdown in market activity but foster ideal conditions for floating oil and LNG storage on a grand scale.

There is little that can be done to enforce delivery and the flotilla from as far away as Malaysia, Liberia and Singapore lurked unchallenged.  Vessels capable of carrying more than 300,000 tons of oil valued around $21 million remain predatory.  Small tankers bringing oil from Russia often use the east coast of the UK to transfer their cargo to larger vessels, while other drop anchor there waiting for business as it is cheaper to remain at sea than tying up at port.  With the price of oil having risen from $40 to $80 per barrel over the last year and with prices expected to at least consolidate as the world eases its way out of the recession, we will undoubtedly see more of these “Oil Sharks” frequenting British waters.

The threat of oil spillage and becoming a potential terrorist target does not appear to have awakened the powers that be to take any action and no doubt they have cast the same blind eye, as Nelson would have done, not to repel boarders, but to encourage them to make a fast buck.

Rule Britannia, Britannia rules the waves?  Sadly, no more.